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Wednesday, February 28, 2007

From Ananova we hear that entrepreneurial Romanian witches - a recognised profession in the new member state - have expanded their operations since the country joined the EU.

(Stay with us - this is not some sort of Express style story about 'hordes' of Romanians with broomsticks boarding coaches heading for Victoria station.)

Apparently witches have found a lucrative new way of making money - concocting spells to help locals get EU grants.

According to Ananova: "Until now the country's witches have confined themselves to love potions and spells to get cows to produce more milk. But the EU expansion has seen funding for new projects flood into the country and now locals hoping to gain a slice of the action are turning to witches to boost their chances."

Witch Florica, from Pitesti in southern Romania, said: "It's a new type of spell that we had to work out of course.

"You cannot pretend you are a real witch if you cannot help a businessman get the European Union funds he wants. For example, only the other day I had a young businessman who came to me with his papers applying for European funds.

"I spread the cards on his documents, said my spells and splashed the papers with some potions. It only cost him about £40 for my charms but when he gets the money thanks to my spells he will be happy and I will be happy because he will bring me new customers."

Tuesday, February 27, 2007

The World Trade Organisation’s trade policy review for the EU was released yesterday. Today’s IHT has picked up on this, and summarises the report. Average tariff rates on farm goods have increased to 18.6%, compared to a rate of 16.5% in 2004.

As the report notes, products with relatively high tariff protection are almost exclusively agricultural or processed food. These include flours and meat (427.9%); mushrooms (300.8%); frozen beef (276.9%); pineapple juices (209.8%) and live chickens (167.2%).

The WTO reiterates the fact that agricultural products being exported to the EU face far higher tariff rates relative to other goods. Non-farm goods face average applied rates of just 4.0%. Incidentally, tariffs are consistently higher on agricultural product lines where producers in developing countries have a comparative advantage over their EU competitors, meaning that their exports are hit disproportionately hard by EU trade policy.

According to the widely used GTAP database, in 2002 poor countries with a GDP per capita of under £5,000 a year faced an EU tariff of 5% on average. Countries with a GDP per capita of between £5,000 and £15,000 face an average tariff of 2.9%. But countries with a GDP per capita over £15,000 a year face a tariff of just 1.6%

Friday, February 23, 2007

When confronted with statistics about the burden that EU regulation places on UK businesses and voluntary bodies (at the last count it was over £38 billion since 1998) a classic Commission response is to blame it on national parliaments and civil servants "gold-plating" EU laws. (Gold plating in this context is when national politicians or bureaucrats add to EU regulations to make them even more cumbersome)

So I was surprised when at a seminar hosted by the Industry and Parliament Trust both David Arculus (former head of the Better Regulation Task Force) and Rick Haythornthwaite (Head, Better Regulation Unit) both agreed that problem of gold-plating was actually a bit of a white elephant red herring.

Rick Haythornthwaite said that he had looked into the issue but found "limited evidence that there had been significant burdens imposed by gold-plating". Similarly David Arculus said, "we could not find much evidence of UK parliament deliberately gold-plating EU law."

Haythornthwaite was also sceptical about the latest EU deregulatory fad - to attempt to cut "administrative burdens"(the amount of forms that regulations require businesses to fill in). The EU Commission recently announced that it intends to cut these burdens by 25%, but as Haythornthwaite implied, this is just a minor issue: "The big price is the policy cost".

Other interesting snippets: they blamed part of the problem on the plethora of regulators in the UK (the average hospital has to comply with rules from 42 different regulators). Blair and Brown are said to both privately be keen on establishing a one-in-one-out rule for business regulation. And both Arculus and Haythornthwaite called for a significant strengthening of parliamentary select committees - particularly the European Scrutiny Committee (as we have also argued).

Tuesday, February 20, 2007

(1) The Commission proposes various new environmental laws, casually helping itself to new competences in criminal law and taxation as it does so.

(2) The Commissioner in charge of fisheries admits (admittedly not exactly a newsflash) that the Common Fisheries policy is "morally wrong" and that "it is damaging the enviornment". He admits the EU's ludicrously designed policy is leading to the dumping of 880,000 tonnes of dead fish in the north sea every year (releasing at least their own weight in CO2 and methane).

(3) According to one of the other commissioners, Mandelson supposedly asked for his company car to be a environmentaly friendly er... Maserati. He didn't get the £80,000 supercar (in fact his people are denying it this morning), but at a cool 440gCO2 /km it would have been about three and a half times over the Commission's recently proposed 130g /km maximum. Some are more equal than others...

In other news, Dan Hannan has started a blog... his first piece looks at ludicrous EU expenses & perks. They are not going to be reformed any time soon... according to a recent written answer there is no discussion about stripping EU officials of their special low rates of tax. Dawn Primarolo says there are "no plans to amend" the current arrangements. At just 11% income tax EU officials can afford to cough up for the various measures the EU is now proposing.

The EU is also proposing a ban on smoking in public buildings which appears to have no legal basis, wheras the European Parliament has just dumped its own smoke ban. Remember: do as we say, not as we do.

Monday, February 19, 2007

The Adam Smith Institute have launched a competition to design a new and better EU Constitution, with £1000 as a prize for the best contribution – to be judged by EU and UK policy experts. Unlike the monstrosity that EU leaders signed up to - the ASI have said that the winning Constitution is not allowed to be more than 2,000 words long.

The Commission spends a lot of money creating fake civil society organisations which then lobby for "more Europe". In fact a breakdown of the main budget line for propaganda - though of course there are lots of others - shows that they spent €33 million in 2005 on 307 different grants (only 70 of which managed to have their accounts certified).

Thursday, February 15, 2007

OK, so other people pointed it out first. But things in Brussels are getting more and more surreal.

EU observer reports that ministers today agreed to binding renewable energy targets and the breakup of large French and German energy monopolies. The only snag is that the binding renewable energy targets aren't actually binding and the French and German energy monopolies aren't going to be broken up. Now that's real progress.

This is why diplomats love Brussels. The endless opportunies to smooth bald disagreement into smiley happy togetherness. Adding to the weirdnessthe Commission have invited loads of weather presenters from around Europe to come to Brussels to become EU climate change ambassadors.

"These are credible celebrities. Many of them have meteorological training and speak with a great deal of awareness on the issues, as well as being faces that people see in their living rooms every day," an EU official said.

The German Presidency is seeking an agreement on a framework decision on racism and xenophobia which would outlaw “genocide denial” across the EU. The proposed measure says, “Each member state shall take the measures necessary to ensure that the following intentional conduct is punishable: 'publicly condoning, denying or grossly trivialising crimes of genocide, crimes against humanity and war crimes”. However a clause has been inserted which says that member states only have to actually punish such crimes if there is a threat to public order. The UK Government claims this clause will mean it will be able to avoid bringing in a new law as Britain's existing rules against crimes motivated by racial hatred would be enough to cover such offences.

But hang on a minute. If the UK Government believes as a point of principle that (a) we don’t need a law on genocide denial and (b) that these are not questions which should be decided at European level anyway – which it is virtually impossible not to conclude if you have any belief in subsidiarity – then why are we going along with a decision which will establish a number of bad principles? Why not say no to this decision, and let each member state decide for itself whether to have such laws?

No-one should believe the Government’s line that “we are going to accept this but it won’t really change anything”.

Given the dynamic and deeply “fuzzy” qualities of EU jurisprudence, there is every chance that the conflict between the EU law making genocide denial a crime, and the lack of a corresponding UK law will become the subject of court cases. Will cases about whether Kosovo, Bosnia, Armenia etc “officially” count as genocide improve the chances of historic reconciliation? It is not easy to defend the right of deeply unpleasant people to free speech. But there is, or was, a consensus in the UK that they should have it (on the principle that “sunlight is the best disinfectant”). It will say something about the EU’s effect on our political culture if this principle is now abandoned.

On the other hand...

Not content with giving the new extreme-right ITS group in the parliament a million euros a year, the European Parliament's budget for information is now being used to pay for a charming pamphlet from Maciej Giertych MEP, which is discussing "civilisations at war in Europe".

Apparently the clash of civilisations in question is "the Jews versus everyone else". It turns out they wantedto be in ghettosall along.

Uh-oh:By their own will, they prefer to live a separate life, in apartheid from the surrounding communities. They form their own communes (kahals), they govern themselves by their own rules and they take care to maintain also a spatial separatness. They form the ghettos themselves (…) It was only Hitler’s germany that created the concept of forced separation, of a closed ghetto from which Jews were not allowed to leave... this clearly demonstrates that no middle ground is possible on issues differentiating civilisations

Another good reason there should be no state funding of political parties & nutters campaigning...

Wednesday, February 14, 2007

Today's Mail has picked up on a report by the EU's anti-fraud office OLAF which calculates that the EU loses £2 million pounds of its funds a day to fraud. It put the cost of all EU fraud between 1999 and 2005 at £4.4 billion.

The EU's response to this shocking news? EU Anti-Fraud Commissioner Siim Kallas (who was himself accused of siphoning off 3.5 billion roubles when he was Governor of the Central Bank of Estonia) adopted the classic approach of half admitting that there used to be a problem and then going on to emphasise that everything is much better now. "New anti-fraud procedures have been introduced" etc.

Kallas' arguments might have been convincing if it wasn't for the fact that the auditors refused to sign off the EU's accounts for a 12th year running in November.

The auditors found, for example, that half of all cattle declared by farmers in Slovenia (in order to qualify for grants) did not exist, while a quarter of sheep and goats had similarly "disappeared". In Spain, Greece and Italy, payments worth over 2bn euros for olive oil producers were either inflated or wrong. Worse still, in Greece the statistics that are used to determine who gets what from the CAP are controlled by the Greek Farmers’ Union.

Monday, February 12, 2007

While watching the tributes to Ian Richardson on Channel 4 news on Friday I was amused to see Nick Brown - former Labour Chief Whip and close ally of his namesake Gordon - use the occasion to score some points over an old rival.

He was asked if he ever encountered any characters like Richardson's Francis Urquhart while he was a party whip. He replied that the only person who compared to Urquhart in Machiavellian terms was Peter Mandelson, but that they were different for two key reasons.

1) Mandelson was too unpopular to be a good whip and no-one listened to him. Brown smirked as he described how poor old Peter was disliked so much by his other colleagues that the Chief Whip refused to give him a seat in the whip's office - forcing him to stand and make notes "on top of a filing cabinet".

2) Urquhart was a true-blue Tory and as such "believed in something... not a charge that could be made against Peter Mandelson".

Which made it all the more interesting to read Peter Oborne's article on Saturday about David Cameron's attempts to woo Mandelson, knowing that he won't get to keep his current job past 2009 if Gordon is still in power.

PS - the News of the World reckons that Gordon Brown is thinking about postponing the next General Election until May 2009. Apparently he is keen on combining it with the European elections in order that he can campaign on a platform of trying to make Cameron and the Tories look "soft on Europe". Does this mean that Brown will veto any attempts to bring back the EU Constitution?

Remember the old joke where various poliical systems were described in terms of "you have two cows?" Someone in the City sent us a new version for various financial markets which has gone round on Bloomberg this morning... interesting to us for the City's suitibly jaded view of the EU carbon emissions market...

Leveraged Buyouts You have two cows. You come home from the fields one day to find Henry Kravis chatting to your spouse at the dining-room table. Two days later, you have no spouse, no farm, and no table. Two guys the size of sumo wrestlers have saddled up the cows andare riding them around the farmyard.

Currency Market You have two cows. China has 1 trillion cows. Guess who sets the price of milk?

Bond Market You have two cows. One is Brazilian, one is Australian. They yield 25 quarts of milk per day. That's half as much as three years ago, when you traded your less-lactiferous German and U.S. cows for them. You are thinking of swapping for a pair of Namibian cows. They only have three legs but, hey, they produce 26 quarts per day.

Derivatives You have two cows. You repackage five of them into a Collateralized Lactating Obligation, pay for a AAA credit rating, slice the CLO into 10 pieces and sell it to investors, skimming the cream from the milk for yourself. Three of the cows fall ill, and the credit rating plummets. You get to keep the cream.

Hedge Funds You have two cows. A guy in an open-necked shirt drives up in his Bentley and offers to take care of them for you in return for a year's supply of steak and 50 percent of their milk. They won't be allowed to leave his compound for two years. Six months later, you have half a cow, producing sour milk. ``You have to be willing to lose rump today to get rib-eye tomorrow,'' the hedge-fund guy mumbles through a mouthful of sirloin and champagne.

Economics Assume two cows.

Carbon-Emissions Trading You have two cows. They produce 1.2 tons of methane gas per day. After a hefty donation to the re-election campaign of your local representative, the government gives you enough emission permits for six cows. You sell three permits, buy another cow, and apply for a European Commission grant to build a methane-gas power station.

Goldman Sachs Group Inc. You have 26,467 cows. They are strapped into the milking machines 24/7. Some of them have more hay than they could ever hope to eat. Others aspire to one day having more hay than they could ever hope to eat. The cows with the most hay end up withbig government jobs.

Pension-Fund Management You have two cows. How boring is that? You pay a month's supply of milk to a consultant, who advises you to sell one cow and buy two aardvarks instead. The aardvarks die. The consultant charges you four months of your (now reduced) milk supply andadvises you to sell half of your remaining cow and buy a wombat. The wombat dies. The consultant charges eight months of milk for a copy of his new report, ``Two-Cow Strategies for Alleviatingthe Impending Pensions Crisis.''

Russian Energy You have two cows. Comrade, those cows are an environmental hazard. We suggest you hand one of them over to us.

Interest-Rate SwapsYou have two cows. You pledge one of them to me as collateral in a swap for some of my pigs. I pledge the cow to my neighbor as collateral in a swap for some of his sheep. He pledges the cow to his cousin as collateral in a swap for some of his cousin's goats. Better pray the livestock market doesn't crash and we have to try and round up that cow.

Commodities You have lots of stocks and bonds, but no cows. Are you crazy? Cows are the hot new market. Here, buy this exchange-traded cow futures contract. It can't lose. It gained 40 percent in the past six months.

Gold You have two cows. You wear a cap you made out of tin foil so that the tiny black helicopters can't read your thoughts. You spend your days blogging about how the government's decision to abandon the cattle standard in 1933 was part of a global conspiracy by the world's central banks to destroy the value of your herd.

Friday, February 09, 2007

Interesting that you found my reference to the lies and hypocrisy of "eurosceptics" as a reference to you, and I take it that it is now official that Openeurope is a partisan eurosceptic outfit.

Granted, I had not looked at your report on the Financial Services Action Plan in which you say (and I will have a look) that you are specific about some pieces of legislation which you do not think are worth keeping. If so, I am sure you will agree that this is the exception rather than the rule in the bulk of general eurosceptic criticisms about European legislation.

Interestingly, this very morning, I read in a newspaper belonging to the Economist group, the headline "The EU's Financial Services Action Plan has been one of the more successful exercises in European integration", so there are obviously different perspectives on this one.

I am not sure why you think I am kidding when I say "a large proportion"of EU regulation is designed to cut bureaucracy: I did not say "all" EU regulation. Obviously, some legislation pursues other purposes. To take a topical example, the Commission's proposals this week on cutting emissions from cars is one that primarily pursues an environmental objective - though I hope you would agree that it would make sense to have a common standard in our common market on this point rather than 27 different ones?

I would also be interested to hear your views on the question in my blog piece (delighted you are reading it!) on trade marks and whether you agree with the idea that it would be useful to consolidate and codify EU legislation.

I stand by my comment that it is rather simplistic to say that the EU has "imposed" unwanted and unnecessary legislation on member states when it is the member states themselves, in the EU Council, which approve or not the legislation in question, and when a very large majority (if not unanimity) is required to adopt such legislation. This is quite contrary to the impression that eurosceptic newspapers are all too willing to promote, that it is the European Commission that imposes legislation.

As to the idea that something will slip through because Gordon Brown was away for the birth of his son, this allegation beggars belief in that, if a minister cannot go to a meeting of the Council he is always replaced by another minister and Britain would certainly not have been unrepresented.

As to the takeover directive, you may recall that this fell on a tied vote in the European Parliament. Had some of the eurosceptic conservatives who were in the building but not present at the vote been there to support their party's official position of supporting the directive, it would have been adopted.

All that being said, thanks for sending me your comments. I do welcome comments and I do respond to all comments received. I'm off to have my cup of tea now!

Many thanks for your speedy reply. Never let it be said that MEPs aren't listening.

In fairness, it's in a piece which is about us and a report we did. Or is it "the lies and hypocrisy" of some other group that is making you feel nauseous? In which case we accept your apology unreservedly. :-)

Yes of course - when Brown was away he was replaced by Paul Boateng at short notice. There was then a snap vote, despite him requesting that there wasn't one. That was the point at which MIFID was laden down with all kinds of protectionist and unnecessary requirements, and those who wanted real market opening spent the rest of the process trying to recover lost ground.

The car standard for emissions is an interesting case in point. Leaving aside the question of the meaningfulness of the "average" targets that are now being discussed, and imagining that we really were going to set a "hard" environmental target - would that work?

Are we going to stop cars with worse carbon-mileage coming into the EU from outside? If not, aren't you just going to relocate production of all these types of vehicles to outside the EU?

Regarding our report on the growing burden of EU regulation - I'm sorry that "our lies and hypocrisy make you sick". As with your earlier post about how EU-critics are "like Goebbels", it made us worry that you might have been overdoing it a bit lately. Perhaps you should have a nice cup of tea and calm down.

You mention that we are “rarely specific” about what legislation we do and don’t want repealed. I’m not sure that’s fair. For example on our website you can find a 120 page report on the Financial Services Action Plan, in which we look (in a pretty high level of detail to be fair) at which pieces of legislation are and are not worth keeping. We also look how individual bits of legislation might be reformed.

You argue that "a large proportion of this EU regulation is designed precisely to cut bureaucracy and red-tape for businesses by setting a common EU norm to replace 27 divergent national standards in the EU's single market."

You have to be kidding. Whether it is serious (like rules on working time), or ridiculous (making 12 year olds kids sit in car seats) a lot of EU legislation is not replacing a national standard but creating a new regulation.

Even where it is supposedly harmonisation, the process of reconciling 27 regulations often leads to a sort of "highest common denominator" approach: every national requirement lumped together - with regulation across the whole economy increased as an outcome. What about mutual recognition?

You say that it's "somewhat simplistic" to say that the EU "imposes" regulations by majority vote. But it happens all the time. Think about Gordon Brown being ambushed in the vote over MIFID when he was away at the birth of his son. Think about the number of things we have dumped (like the takeover directive, principled commitment to free trade) in order to try and hold the line on working hours.

Anyway, we would have left you a reply on the blog but you don't seem to have comments turned on for some reason. Perhaps you might turn them on, in the interests of dialogue rather than monologue?

Wednesday, February 07, 2007

There are a bunch of interesting things in the Treasury's review of the internal market (which comes ahead of the Commission's own review in March).

What exactly is this passage on tax "cooperation" about?

Looking ahead, in an increasingly global economy, no country will be able to set its tax policy in isolation from other countries and so cooperation between countries in the EU and elsewhere will important in ensuring that national tax systems can coexist effectively. This will involve continuously working together to drive down costs to business, improve transparency, exchange information and tackle fraud. The key is to preserve national flexibility, while strengthening the effective cooperation between Member States, rather than creating rigid structures incapable of adapting to the evolving demands of globalisation.

It's certainly a change from Gordon Brown's previous attitude to tax coordination (i.e. "no, no, no"). Presumably they are trying to play nice because they need the Commission's permission to take action on VAT carousel fraud.

According to the FT the EU Commission will tomorrow put forward a proposal to require member states to punish environmental crimes with harmonised penalties. The new law is the result of the controversial ECJ ruling in September 2005, which said for the first time that the European Community is able to set criminal penalties and offences if it is necessary to achieve one of the fundamental objectives of the treaties.

It will be interesting to see what happens to this proposal. 11 of the then 15 EU member states fought in court against giving the EU Commission the power to set criminal law for member states. After the ruling the British government’s line was: “We firmly believed it was inappropriate to harmonise criminal law at EU level. We believe criminal law is a matter for member states co-operating intergovernmentally.” Either the UK and others will be forced by the majority to back down from this stance, which would be a major u-turn and a watershed in EU politics, or this proposal will end up in deadlock in council.

Iconic French farmer and anti-globalisation activist Jose Bove today announced he is running for president of France, a move that could further split the country's divided left.

Bove, who gained fame in 1999 for ransacking a McDonald's restaurant near his home in southern France and has encouraged the destruction of genetically modified crops, said his campaign would focus on protecting the environment and fighting globalization

"It is time to decree an electoral uprising against economic liberalism," Bove said.